Standing Committee E

[Mr. Roger Gale in the Chair]

Communications Bill

Roger Gale: Good morning, ladies and gentlemen. Seconds out, final rounds.Clause 376 Annual report on the Secretary of State's functions

Clause 376 - Annual report on the Secretary of State's functions

Question proposed, That the clause stand part of the Bill.

John Whittingdale: The clause deals with the annual report of the Secretary of State. This welcome addition to the Bill was made in response to the Joint Committee's specific recommendation that the Secretary of State should present a review of the exercise of her powers for public interest purposes.
 Although the Government made it clear in their response to the Joint Committee that they were willing to accept that the Secretary of State should be required to lay before Parliament a joint report on the exercise of her functions, but they expressed doubt about whether it would be appropriate for the general duties that are applicable to Ofcom to apply also to functions undertaken by the Secretary of State. It would be particularly valuable if in the review the Secretary of State were to make it clear where she may have departed from the general duties applicable to Ofcom and to give the reasons for such action. 
 The Joint Committee expressed concern, and I should be grateful if the Minister could provide more detail about what actions of the Secretary of State it is envisaged should be covered by the review that is laid before Parliament.

Stephen Timms: As the hon. Gentleman rightly said, the clause was drafted in response to the recommendations of the Joint Committee—it is one of many provisions that we agreed with the Committee—but I am not sure which part of the clause is causing him concern. Perhaps it is subsection (6), which excludes from the report's coverage functions that, as a result of the Bill, will be transferred from the Secretary of State to Ofcom. That applies even if during the period of the report the Secretary of State was carrying out those functions. For example, the report will not deal with the exercise by the Secretary of State of her spectrum functions, which will be transferred to Ofcom. They will be covered, as now, by the Radiocommunications Agency, which reports to the Secretary of State.
 Let explain to the Committee how the clause will work. Subsection (1) provides that the Secretary of State must prepare and lay before Parliament a report on the carrying out of her functions under the 
 legislation specified in subsection (2). Usually, as required by subsection (4), that will be an annual report laid before Parliament as soon as practicable after the end of the 12-month period, as required under subsection (5). However, the first report will cover a longer period. 
 Under subsection (3), the report will cover the functions carried out by the Secretary of State from the enactment of the Office of Communications Act 2002 on 19 March 2002 to the end of the 12-month period that begins on the first date appointed under clause 395(2) for clause 2 of this Bill to come into force—that is, the first date on which functions are transferred to Ofcom. Subsection (6) deals with matters that are transferred from the Secretary of State to Ofcom. I hope that my explanation has reassured the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale). 
 Question put and agreed to. 
 Clause 376 ordered to stand part of the Bill.

Clause 377 - Review of media ownership

Andrew Lansley: I beg to move amendment No. 25, in
clause 377, page 320, line 25, at end insert 
 'and broadcast radio and television services'.

Roger Gale: With this it will be convenient to discuss the following:
 Amendment No. 26, in 
clause 377, page 320, line 36, at end insert— 
 '(4A) Any report to the Secretary of State on a review carried out prior to the coming into force of section [broadcasting public interest considerations] must set out OFCOM's recommendations on whether that section ought to be brought into force. 
 (4B) Any report to the Secretary of State on a review carried out after the coming into force of section [broadcasting public interest considerations] must set out OFCOM's recommendations on the exercise by the Secretary of State of his powers under Part 3 of the Enterprise Act in connection with broadcast radio and television services.'.
 New clause 1—Broadcasting public interest considerations— 
'(1) Section 58 of the Enterprise Act (c.40) (specified considerations) shall be amended as follows. 
 (2) After subsection (2), there shall be inserted— 
 ''(2A) The need for— 
 (a) accurate and impartial presentation of news and factual content in television and radio programming; and 
 (b) free expression of opinion in broadcast television and radio services 
 is specified in this section. 
 (2B) The need for, to the extent that it is reasonable and practicable, a plurality of views in broadcasting television and radio services is specified in this section.''.'.

Andrew Lansley: Clause 377 provides the duty for Ofcom to conduct regular reviews of media ownership. The Committee will recall that media ownership rules are subject to a reduced number of specific rules on cross-media ownership. That was the subject of much debate in the Joint Committee. As mentioned previously, the Joint Committee did not propose to
 the Government that media ownership rules should be abandoned entirely. In fact, it supported some of them, and the majority of members of the Committee supported the retention of more media ownership rules than the Government currently support.
 Other members of the Joint Committee can correct me if they think that I am wrong about this, but I think that to say that the Committee took the view that the cross-media ownership rules—even those that it promoted—should necessarily be kept permanently would be to misinterpret the Committee's views. While the Committee felt that there was a case for some specific media ownership rules at present, it believed that Ofcom ought to move towards the progressive abandonment of those media ownership rules over time. That was a compromise of sorts, but a practical one that would benefit from being translated into the legislation. 
 That immediately raised the question of the process and the way in which it would work. Members of this Committee can vouch from their personal experience for the fact that, in the past, the process was that we returned and legislated regularly to adjust to changing circumstances. My view, which is shared by the Joint Committee, is that that is a bad way of going about legislation, because either we impose tougher rules than are required for the purposes of maintaining plurality in the media, or we go too far in trying to future-proof legislation so that it lasts a few years. To have a mechanism designed for the long term would provide a much better means of future-proofing our management of cross-media ownership rules. 
 I have confessed that that view was a compromise. My starting point was to ask why we could not allow competition policy to deliver that aim—

John Whittingdale: Hear, hear.

Andrew Lansley: My hon. Friend shares my instincts. I was persuaded, not least by analogy to newspaper ownership, although it is only partly relevant, that there was a case for going beyond the normal application of competition rules to protect the specific public interests involved in the ownership of media. If a public interest is expressed in the ownership of newspapers, an even stronger public interest is expressed in the ownership of television and radio services.
 By what mechanism do we proceed? The view of the Joint Committee was that a plurality test should be applied across media generally. That is stated in paragraph 224 of its report. The reason why I have not attempted to carry that view into the Bill in the form in which the Joint Committee recommended is, first, because it is designed for all media. We have separately discussed newspaper mergers. There is a case for recognising the special characteristics of the newspaper merger regime in respect of the jurisdictional test that needs to be applied. 
 Secondly, the Joint Committee, in so far as it expressed the public interest, talked about the maintenance of 
''accurate presentation of news, the free expression of opinion and a clear differentiation between the two.''
 Whether that can be achieved for newspapers through legislation is arguable: I would argue that it cannot, but others might argue that it can. However, no one is seriously arguing that it should be the role of Ofcom—still less of the Office of Fair Trading under the merger regime—to ensure clear differentiation between the presentation of news and the expression of comment in radio and television services. That is not a practical proposition. 
 I confess that I have, to an extent, moved away from the Joint Committee's proposals. I would prefer a plurality test to be applied to television and radio services. It might be helpful if I explained the mechanism by which that could be done under amendments Nos. 25 and 26. Clause 377(2) says that, as part of the review of media ownership, the provisions of part 3 of the Enterprise Act 2002 in relation to newspapers—that is, the merger control regime—should be considered. Amendment No. 25 would add at the end of that subsection: 
''and broadcast radio and television services''.
 Amendment No. 26 would give Ofcom, in addition to its review of media ownership, the duty to make recommendations in its report to the Secretary of State about bringing the plurality test into force. It is important to bear that in mind. 
 We would not insist at the outset that the plurality test is the only mechanism by which cross-media ownership rules can be maintained. We would leave it to Ofcom to make recommendations about the rest of the media ownership rules, as the Joint Committee explicitly intended. I hope that Ofcom will work in a progressively liberalising direction in relation to those rules. However, it would also have to make a recommendation to the Secretary of State about the bringing into force of the public interest and plurality tests in relation to broadcast radio and television services. New clause 1 would apply the plurality test in practice by inserting it into the Enterprise Act, just as the newspaper public interest considerations specified in clause 361 would add to section 58 of the Enterprise Act. 
 What would be the benefits of my proposal? First, it is flexible. It is a way of future-proofing the legislation so that if competition authorities were presented with a merger between substantial radio and television operations, they could consider the characteristics of the merger and whether the character of the owner was in any way likely to prejudice the accurate presentation of news, freedom of expression of opinion, or prejudice plurality, which is also specified in new clause 1. 
 Plurality has a wider meaning than simply the accurate presentation of news; if it did not, we would not specify it separately. It is difficult to specify the need for plurality other than by using the word, and that is what I have done. I have used the language applied elsewhere in the Bill in relation to newspapers. In a sense, plurality is a subjective test, and I make no bones about that. However, its subjectivity does at least mean that the provision is flexible.

Michael Fabricant: I am following my hon. Friend's argument with great interest. He mentioned ''substantial'' radio and television stations. This morning, I looked at December's figures from Rajar—Radio Joint Audience Research. There has been some movement in audience share between radio stations in the past three or four months. In using the word ''substantial'', is my hon. Friend referring to the terms of the licence of a radio station—I refer specifically to radio—or is he talking about market share or reach? The latter is very dynamic.

Andrew Lansley: I am talking about ''substantial'' as it is used in the Enterprise Act. I am talking about the turnover test—the £70 million test in relation to enterprises that would cease to be distinct for those purposes; and the market share test—a quarter of any given market. We went around that track when we discussed newspapers having a substantial part of the United Kingdom market.
 Those are the two tests that I would apply. They would not relate specifically to a particular licence. They would be market related. I have not sought to specify any other distinct jurisdictional test, but if one felt that the normal jurisdictional test under the Enterprise Act were not appropriate for this purpose, one could add additional jurisdictional tests as a qualification in exactly the same way as happens in the newspaper regime, in which newspaper mergers are a specified public interest consideration and there is a separate special public interest consideration to cover small newspaper mergers through the jurisdiction test. 
 The first advantage of such an approach is flexibility. The second is that it would enable us to apply a regime that prevents restrictions of plurality or improper controls over the media in a way that avoids leaving the type of loopholes found in the existing legislation. 
 There is a tendency when we reach the latter stages of a Bill to refer to past debates, and we have previously discussed the disqualification of religious organisations from holding licences. It is one of a small number of specific disqualifications with which many of us would like to dispense, but if we do that, there must be a safeguard in place. The benefit of the plurality test is that it does not examine the characteristics of the person who would own a television or radio station by reference to whether they are officer holders in a religious organisation or political party. Instead, it considers whether there is anything in the relationship that the person would have with the radio or television service that might diminish impartiality or prejudice accurate presentation of news and so forth. 
 In that sense, the test I propose is much more flexible. We would no longer need to discriminate against people who happen to be office holders in religious organisations. We would be examining the personal characteristics of the person or the corporate body rather than employing some pre-existing prejudice about the nature of the ownership of broadcasting services by particular types of people. 
 The test would also close a loophole. As we have discussed before, if someone has bigoted religious or extreme political views but happens not to be a member of or office holder in a religious body or political party, there is nothing in the disqualifications attached to licences that automatically prevents them owning television and radio services, even though it may be perfectly obvious that such a person would not be suitable. The Government's response would be, ''The problem can be controlled by employing the licence conditions,'' but if those conditions really were sufficient, it would also be possible to use them to deal with bigoted views held by people who are office holders in religious organisations. 
 If the Government believe that the licence conditions themselves are sufficient to maintain the integrity of television and radio services, why do they continue to propose media ownership rules? The rules are required because the licence conditions, important though they are, are not sufficient. It is assumed by the Government and understood in practice that the ownership of a broadcast organisation can, over time, influence the characteristics of that organisation—through appointments and so forth. If the Government were to go down the route that I suggest, we would be able to prevent the ownership of a broadcast organisation by anybody who could prejudice it in that way; or, if the Bill were so drafted, we could have access to the same kind of conditions that apply to newspaper mergers to prevent the owner of a broadcast station from appointing and dismissing editors and the like in ways that prejudice its impartiality.

Michael Fabricant: Would not the terms of the licence prevent that from happening? The licence that the broadcaster would hold with Ofcom—which is currently held with the Radio Authority or the Independent Television Commission—would prevent a change in the programme output. If the programme output remains constant, is it not irrelevant who the staff are?

Andrew Lansley: I am grateful to my hon. Friend for that comment, because it helps me to explain the point and takes me on to something else I wanted to say about the subject.
 With regard to the impartiality test, in a previous debate, we recognised that material in a news programme can be balanced but not impartial, because—as the Minister for Tourism, Film and Broadcasting probably recalls—it might be being used to set an agenda. A broadcast news service can change the terms of a debate if over time it chooses an agenda that is slanted towards a particular prejudice. We have discussed the fact that the agenda for television is often set by newspapers. In this context, cross-media ownership is one of the issues with which we have to deal. A television news service might adopt the same agenda as was set in a group of newspapers that morning. That is how someone could influence the public over time to believe the same things as that individual believes. 
 That is more likely to be done for a commercial reason than a political reason—for example, in order to steer people towards believing that a newspaper is presenting the argument that people think is important. Licence conditions do not bear upon that: they would have to be extremely sophisticated to detect that sort of shift over time, and I have not seen any that are sufficiently sophisticated. Let us say that every evening, newspaper X's news programme might subtly begin to include—

Chris Bryant: Newspaper PG?

Andrew Lansley: We are not going to tar any particular person. If a television or radio station uses the same story in its evening news as was told in its owner's newspaper, that can have a big influence.

Chris Bryant: I must be misunderstanding the hon. Gentleman. He seems to be suggesting that Ofcom, through the Secretary of State's review, should have a process for checking whether the ''Today'' programme is developing an agenda, and for preventing it from doing so. I should not have used the ''Today'' programme as my example, because that is a BBC programme, and the BBC is covered separately. I should have referred to ITN, or The Sun, or Sky News and The Sun together. Is that really what the hon. Gentleman is suggesting?

Andrew Lansley: No, I am not suggesting that we should go down the path of trying to exercise editorial control over the long term. We are discussing whether we can have a system of ownership control that is designed to prevent ownership by somebody who is likely to prejudice accurate presentation of news on a broadcasting channel. That is a judgment that would have to be made.
 The competition authorities had to look at Mr. David Sullivan. By extension from his previous activities, they reached conclusions about what would be the likely impact on the Bristol Evening Post of his owning it. In my example, one would look at the owner of newspaper X and, by extension from his or her activities, try to draw conclusions about what would be the consequences for television station Y or radio station Z of newspaper X's owner taking control. There would not be continuing editorial control: one would have to make judgments about such things, and if one got them wrong, one would have to try to use licence conditions—they are the back-stop. 
 The point is not whether we have licence conditions, but the mechanism by which we try to prevent such prejudicial media ownership. Should we do that by applying very few specific rules that hinge on arbitrary distinctions such as the 20 per cent. rule, or should we apply a proper public interest test that allows competition authorities to examine the genuine merits of individuals and acquisitions rather than waving some things through and stopping others?

Michael Fabricant: Notwithstanding the fact that television news is generated by pictures rather than editorial values, does my hon. Friend not think that there are huge dangers in an organisation prejudging
 what someone might or might not do? Qualitative judgments would have to be made, but they might be prejudicial and inaccurate because a person would be trying to predict the future.

Andrew Lansley: That is precisely what we propose to legislate for in relation to newspapers, and it is what we have done for 35 years.

Chris Bryant: You argued against it then.

Andrew Lansley: I have not argued against a newspaper merger control regime. We argued about the regime's characteristics, but we are not against it in principle.
 I want a broadcast merger control regime that parallels the newspaper regime. It would have force because it would bear on cross-media ownership. Opportunities for cross-media promotion could be commercially important, and the competition authorities might bite on that in any case because of the possibility of increasing commercial exploitation of market power among connected markets. However, the authorities might bite all the harder if they felt that there would also be an impact on public interest due to diminished plurality.

John Whittingdale: I have some sympathy with my hon. Friend's argument. He said earlier that judgments on such issues would inevitably be subjective. The competition authorities have greater expertise when adjudicating on matters of economic regulation and dispute, but the public interest test that he proposes would go beyond economics. Would the competition authorities be able to reach a judgment on the issues that he suggests they consider?

Andrew Lansley: That is a fair question, and the same question applies to newspaper mergers: why would the Competition Commission be an expert on newspaper mergers? The answer is, because the commission may establish a panel for that purpose consisting of people who can bring their expertise to bear.

Kim Howells: It is not the same thing.

Andrew Lansley: The Minister says that it is not the same thing, but the Competition Commission would act by establishing precisely such a panel. It would be better if Ofcom were not the relevant body because if it were it would become intimately connected with the broadcast market from the standpoint of pursuing the public service remit rather than standing back and examining specific issues in a merger. If Ofcom had additional powers rather than acting in an advisory capacity, there would be a risk, as the hon. Member for Rhondda (Mr. Bryant) implied, of it becoming an all-power media commissar determining who owns what. Under the structure that I propose, the Competition Commission, not Ofcom, would have the power. The division of power between the two when considering mergers is important.
 The point of the public interest test is to enable us to liberalise media ownership rules over time, and to move away from arbitrary distinctions and toward a more flexible regime. As Ofcom made recommendations to the Secretary of State, she would have the power to introduce a public interest 
 test on broadcasters. The process would be entirely complementary. 
 To pre-empt the Minister, the Government's response to the Joint Committee was that: 
''the only way to guarantee sufficient levels of plurality on a cross-media basis is to set clear, specific limits on ownership through a number of key rules.''
 That is as assertion for which there is no evidence. We have not attempted to achieve plurality on a cross-media basis through the application of a public interest test, because the many-headed set of competition media ownership rules on broadcasting have prevented us taking that path. They have prevented us from seeing what the market would dictate and understanding how the public interest can properly be protected without a specific set of rules. 
 The statement in the Government response implies that we are not to have competition in broadcasting because the only way to have a diversity of suppliers in broadcasting is by the application of a set of rules that requires a given number of providers. That is an assertion for which there is no evidence. Unless we adopt a public interest test and relax the media ownership rules, we will not genuinely test what competition is capable of delivering in broadcasting, or whether we can have a flexible regime that allows the market much greater freedom. 
 One of the worst arguments in favour of the Government's approach appears in their response to paragraph 224 of the Joint Committee's report. The Government said that there was little support from respondents to the consultation for a cross-media plurality test. To be perfectly honest that does not surprise me. It is like asking a group of incumbents whether they want to have something that opens up the market to greater competition. They always say no, because incumbency is generally a good thing, and they want to protect it. 
 If they have a set of rules, many organisations and businesses in many industries quite like to cleave to those rules, because they are part of their structure of work and the way in which they do their business. For the Government to use in support of their argument the idea that businesses generally prefer to be able to plan according to a clear set of rules seems to me to be completely wrong-headed. The point about being in business is that one is in the business of risk. Being in broadcasting is no different from being in steel manufacturing, and broadcasters ought to understand that they are in a risk business. Those who occupy a position in this very important industry have to justify their actions, especially in relation to merger control, competition and public interest issues. They should understand that they have to justify themselves on those issues and not simply operate within some clear set of rules. To do otherwise is simply to take away risk from businesses whose job it is to operate in a risk business. 
 The purpose of the amendments is to introduce a plurality test. It would have been much better if we could have discussed this matter before we discussed media ownership rules, but I am sure that those in another place will return to this issue. There is a lot of 
 genuine belief that the way I suggest would be a better way of proceeding in terms of trying to maintain plurality in the public interest than continuing with the arbitrary set of rules.

Nick Harvey: I am pleased to give my support to the amendments, especially new clause 1. The hon. Member for South Cambridgeshire (Mr. Lansley) made the observation that opinion on what is necessary by way of specific media control ranges from one end of the spectrum, where we find organisations such as News International and BSkyB, which have argued that media ownership should be subject to general competition law and that the provisions of the general law would be adequate to tackle issues of morality, through to the other end of the spectrum, where we find, for example, those representatives of the National Union of Journalists told the Joint Committee that any relaxation would lead to concentration of ownership and in turn
''a reduction in diversity and range of content''.
 There is clearly a wide range of views on the issue. 
 In their policy document, the Government stated that 
''competition law alone is not sufficient. It can address issues of concentration, efficiency and choice, but it cannot guarantee that a significant number of different media voices will continue to be heard, and it cannot address concerns over editorial freedom or community voice''
 They have hit just about the right note in that statement, and the plurality test that the hon. Gentleman proposes would be a good way to give effect to that policy statement. 
 All decisions on media ownership controls reflect a balance between plurality and cultural considerations and economic efficiency. The hon. Gentleman presumed in his remarks that we would be making progress towards liberalisation in this field. I agree with him about that, although I am not necessarily confident that we will get there as quickly as he and his hon. Friends think that we might. The plurality test is potentially more important because there are concerns about that issue. 
 We already have two fairly new pieces of legislation in the Competition Act 1998 and the Enterprise Act 2002; the Communications Bill will complete its passage and will become law during this year; Ofcom, the brand new regulator, will bring together five existing regulators and, in addition, midway through last year the Government chose to put the cat among the pigeons by revolutionising our ownership rules and allowing non-European ownership. Those combined measures will, in every sense, lead to a radical shake-up of how the sector is regulated. 
 During our previous debates in Committee, I have commented that we will not know for some time how all of those measures will work out. The legislation must be probed and pulled apart, a body of case law will no doubt emerge and Ofcom will take some time to bed down, become effective and prove itself as a regulator. In the context of change and uncertainty in 
 these fluid times, the kind of plurality test that the hon. Gentleman's amendment would introduce would provide a useful route map or guide for Ofcom as they set about tackling the situation. 
 The hon. Member for Lichfield (Michael Fabricant) observed that Ofcom and the other competition authorities were being asked to do fairly subjective work. He is right, up to a point. However, I do not accept the hon. Member for Rhondda's point that that is somehow rocket science. The matters are not unduly complex or vastly different from those on which regulators would make decisions generally and in respect of the Bill. It is possible to make rational judgments about the plurality of media voices, as the hon. Member for South Cambridgeshire observed when he moved the amendment. One could consider the track record of the parties who are involved in the proposed merger. Reasonable deductions can be made from such information, although the point has been made that certain media groups allow and sometimes even encourage different editorial policies in different parts of their empires. Nevertheless, reasonable judgments can be made based on track records and past form and that would be a rational way for a test of this kind to be considered and applied. 
 In addition to the legislative and regulatory changes to which I have referred, the whole sector is going through a period of rapid change. The advance of digital television means that there are many more outlets and that is significantly changing the market. If we look again at the sector in a relatively few years' time, there will be a different situation from that which we see today. Perhaps things are not progressing as quickly as they were when the White Paper came out—we know the reasons why. However, even if things have slowed down a bit, significant change is in hand. 
 The general merger regime will not adequately protect plurality in the sector and a regime along the lines of that proposed would be helpful. Plurality should be one of the key areas of public interest, and I hope that the Government will yet allow a more explicit statement on Ofcom pursuing the public interest. There is a public interest in maintaining a range of owners and voices in the broadcast media, and achieving that should be one of Ofcom's purposes. 
 The hon. Member for South Cambridgeshire struck a sensible balance. I would have liked the Joint Committee's original objective to have carried forward and for provisions on newspaper mergers to have contained the proposed consideration of balanced news presentation and freedom of opinion with a clear distinction between the two. However, I am aware of the vociferous lobbying of the newspaper section on the relatively mild provisions that were suggested for its sector, and I shudder to think what would have happened if we had carried forward that entirely admirable additional test. 
 The proposal is sensible. It would give a framework for consideration of what constitutes the public interest. The hon. Member for South Cambridgeshire is right that as the Bill and Ofcom prove themselves and the shock of American ownership is absorbed, we 
 will adopt a more liberalised approach. In the meanwhile, the plurality test would be a useful addition to the regulatory book of tricks.

John Whittingdale: My hon. Friend the Member for South Cambridgeshire began his remarks by saying that his instinct was to rely on competition law whenever possible. He and I come from the same stable, so that is my instinct as well.

Kim Howells: What stable is that?

John Whittingdale: The Tebbit stable. It produced a lot of winners over the years.
 My hon. Friend pointed out that the provisions in the amendment duplicate those in the Bill relating to newspaper acquisitions, which the Committee examined and agreed to. I have greater reservations about applying a plurality test to newspapers than to broadcasters. There are no barriers to entry in the newspaper market and fewer safeguards are required because plurality and competition will come about when people identify and try to fill a gap in the market. That is not always possible in broadcasting, and that has been the justification for putting all sorts of requirements on broadcasting companies that go beyond normal requirements on other commodities. We have addressed that through licence conditions. 
 There is an interesting debate about whether it is preferable to lay down specified minimum standards in a host of different areas, which the Bill does to public service broadcasters, or whether it is better to have a more general requirement to try to achieve plurality. I can see some attractions in moving away from trying to specify individual desirable outcomes—that will always be a matter for argument—and instead having a more general plurality test. There are, however, some difficulties with that in practice, because plurality is a difficult concept to pin down. As I suggested in my intervention on my hon. Friend the Member for South Cambridgeshire, we are asking for an economic regulator to reach judgments on plurality that are fairly political. That would be difficult, but as my hon. Friend has already said, we have already asked the Government to do that in relation to newspapers. 
 Plurality might also be attractive to the Government because, as my hon. Friend suggested, it would get them off one or two rather difficult hooks on which they have impaled themselves, not least on the question of religious ownership, about which the official Opposition feel strongly. We spent an interesting morning debating that issue and the Minister may recall that there was a discussion about whether the bar on religious ownership might prove to be in breach of the European convention on human rights. The Minister said that that issue had been tested by the European Court of Human Rights and was rejected. I responded by saying that the judgment was under challenge and that the matter was by no means settled in the European Court. In support of what I said, I shall take this opportunity to draw the Minister's attention to application number 11072/02, which has been assigned to the challenge by the Court. The matter is by no means resolved. The Minister promised me, when we considered the matter earlier, 
 that he would have a look and come back to me on the status of that challenge. 
 The Government are in some difficulty and my hon. Friend's amendment could be attractive to them. It would allow them to get away from the specific bans and licence requirements that could lead to argument and which may, in some cases, be in breach of our human rights requirements. Instead, it would enable them to operate under a more general requirement that could be permitted by the Competition Commission. Plurality would, however, have to be examined in advance and it would be difficult to determine. 
 During my hon. Friend's remarks, the Minister for Tourism, Film and Broadcasting was muttering ''Big Brother'' every now and again. I would not support anything that had the potential to become a Big Brother measure. I can understand why the Minister might express a concern that that potential could exist, but my hon. Friend is not suggesting any such thing. 
 There is a problem in defining plurality and there will be a problem in examining the specifics of a situation and deciding whether a plurality test has been met. My hon. Friend has done a great service in raising the issues and the Government should certainly explain why they find it acceptable to apply the test to newspapers—a more open market—and not to broadcasters. It is difficult to understand how that could be done in one case and not in the other.

Kim Howells: I hope that the hon. Gentleman and hon. Members will forgive me for having missing the Tebbit stable reference, which I understand was made during last Tuesday's sitting. I would argue that the hon. Member for South Cambridgeshire would fail the famous Tebbit test, even though this is not cricket.
 The Government, like the Joint Committee, believe that the principle of plurality is central to achieving democratic debate. By plurality, we mean that in democratic society it is important that people have sufficient sources for information, new and views. The Government believe that the only way to guarantee sufficient levels of plurality, especially on a cross-media basis, is to set clear, specific limits on ownership through a number of key rules. We should continue to remind ourselves that media ownership rules are about ensuring plurality, not competition, for which there are competition rules. 
 One proposal is that we rely on competition rules to ensure plurality. I believe that the hon. Member for South Cambridgeshire started to suggest that, although the argument became a little clouded. The hon. Member for Maldon and East Chelmsford restated his belief that we did not need anything beyond competition rules. I do not agree, although they are the most important factor and will bring the greatest benefits. In many cases, competition rules can produce an outcome consistent with safeguarding plurality, but they will not always do so, especially when the issue relates to cross-media ownership. 
 From a purely competition point of view, ownership of assets across a number of media may be acceptable, because they may be thought to involve 
 different markets. However, such a concentration could present serious plurality concerns, not least because the media owner could achieve a degree of pervasiveness. The same message could be played across different media, giving it greater impact because one media could appear to be independently verifying another. The hon. Member for South Cambridgeshire mentioned a fascinating example of a long-term agenda, which could slant the way in which a subject is treated by the media. 
 Other hon. Members have argued that what is required is a competition test combined with a plurality test of some type. I did not quite follow the argument of the hon. Member for South Cambridgeshire, but I believe that that was more or less his point. However, although such a regime is right for the newspaper industry, as we have often discussed, that industry does not operate under the same regime as other media sectors. Most individual media markets have media licensing regimes. Within those regimes, we will continue to ensure that there are appropriate controls on any increased concentration or change of ownership. 
 In contrast, newspapers are not subject to licensing controls and there is no intention that they should be. As there are no licences, it is not practical to place specific limits on ownership in the same way as it is for radio, for which there is a fixed number of licences for each area. Consequently, there is a need for additional provision in the merger control regime to protect the public interest ensuring the accurate presentation of news, free expression of opinion and the plurality of views in the United Kingdom press. 
 When we deal with other areas of public ownership, the competition plus public interest test is something of a cop-outa technical term, beloved by us competition anoraks. I believe that plurality goes to the heart of what makes a democratic state, so, as far as is possible, Parliament should decide on appropriate limits for media ownership and should also have the opportunity to agree any changes to those limits. The other difficulty with a plurality plus competition test, is that it inevitably leads to uncertainty.

Andrew Lansley: Before we move on, the Minister or his colleague the Minister for E-Commerce and Competitiveness have argued on several different occasions on specific clauses in the Bill that, because a power is exercised by the Secretary of State, who is accountable to Parliament, the public interest is being defended in a way that is accountable to Parliament. The test is no different. Because it is a public interest consideration, it may be the subject of a Competition Commission report. That report is made to the Secretary of State, who has the power to implement it, and can either act consistently with it or not. Therefore, the measure would be accountable to Parliament.

Kim Howells: Maybe. I would still describe that as a cop-out. We have to make hard decisions about the subject. We should have the ability to revise the rules when necessary, because the market changes, as some hon. Members have made clear.
 The other difficulty with a plurality plus competition test is that it inevitably leads to uncertainty, which in turn can lead to unnecessary costs in both time and money. The hon. Member for South Cambridgeshire made a fair point on that subject. The hon. Member for North Devon (Nick Harvey) supported the hon. Member for South Cambridgeshire when he said, ''Well, they would say that, wouldn't they?'' or, in other words, that companies who believed that they had vested interests would not, once they were in that trench, let anyone else in. Of course that is a danger. 
 However, I would argue that the existing tests for cross-media ownership could hardly be said to have been a great success. They are disliked by the industry, the costs and uncertainties involved have hampered business, and hardly anyone has failed the test. I spent three and a half years at the Department of Trade and Industry as a Minister with responsibility for competition, and I cannot remember one test taking place in the communications sector. There may have been one—I have no doubt that someone will dig one out—but I cannot recall any offhand. We should remember that fact. 
 There is no equivalent in newspaper publishing to, for example, spectrum scarcity. Ownership is not restricted to a limited number of licenses, as in broadcasting. There is more scope for market entry. There are no licences, and no specific limits are placed on newspaper ownership. We should consider that. We have thought carefully about whether we should introduce the concept of a cross-media plurality test in the merger decisions, and did so most recently in our response to the Joint Committee. The idea was also one of the options in our consultation document on media ownership rules, published last November. However, there was little support from respondents, mainly because of the uncertainty involved in the application on a cross-media basis. As our response said, 
''businesses generally preferred to be able to plan according to a clear set of rules.''
 I readily acknowledge the point that the hon. Member for South Cambridgeshire made. Of course business prefers such a situation, but we in Committee are trying to balance on a high rope. We have to make sure that business is not burdened by additional rules that I would argue are unnecessary.

Michael Fabricant: Besides, if we are trying to future-proof the Bill, we should remember that in due course, when everyone receives television—and we are talking specifically about television in this instance—through a digital regime, and there are no frequency spectrum problems that limit the number of channels, television could have the freedom that is currently enjoyed by newspapers. Does the Minister agree?

Kim Howells: Yes indeed. I am glad that the hon. Gentleman raised that issue. We had a long discussion, which I do not intend to revisit today, about religious ownership. The opening-up as a consequence of the shift to digitisation will make a big difference.
 In an earlier sitting, the hon. Member for South Cambridgeshire expressed some surprise about the way in which industry has responded to the proposal. I told him them, and will tell him now, that that is simply how industry responded, and if he wants to look at the responses, there are all on the website for him to see. Although businesses may be used to dealing with uncertainty daily, they do not actively seek out uncertainty. We should make clear rules when they are appropriate. If we accepted the amendment, we would effectively be putting those who wanted to acquire media assets in a worse position. In addition to complying with the clear and transparent ownership rules and satisfying the competition authorities, an owner would face the further obstacle of satisfying a plurality test. The Bill is intended to remove regulations, not to impose new and unnecessary ones.

Andrew Lansley: I do not want that moment to pass without the Minister recognising that the structure of the amendments is not necessarily to impose new rules, but to give the option for a further liberalisation of media ownership rules on the one hand, and the introduction of a public interest plurality test on the other. It is not necessarily belt, braces and a piece of string. If we get rid of one, we may want to introduce the other.

Kim Howells: Yes. I would not want the hon. Gentleman to think that I want to reinforce anybody's reputation outside the Committee for wanting additional regulation. By instinct, he is a Tebbit stable deregulator. I want to put that on the record, but the amendment is wrong and I hope that he withdraws it.

Andrew Lansley: I confess that nowhere in the Minister's argument have I heard something that persuades me that that is not a better route to go down. We finished with the question of whether it would be an additional burden on business. Businesses want to move. If we said to those in the broadcasting industry, ''Do you want to be in a situation where you are essentially governed by competition rules alone?'' most of them would say yes. They have not been in the situation where they have had the application of a public interest test on plurality in addition to that, but if they looked to the newspaper public interest regime, they would recognise that the regime that was being introduced—as distinct from that under the Fair Trading Act 1973—would not be seriously burdensome to the newspaper industry over and above what it must do to satisfy the competition authorities.
 If it is a burden, it will be a burden to the small number of potential acquirers of newspapers or broadcasting organisations who would raise serious public interest concerns. Those are not necessarily the people whom we want to relieve of the burden of having to worry about whether they satisfy the test or not. The media ownership rules that will be retained are in a sense predictable, but the reason why the Government have argued for the abandonment of media ownership rules is that the introduction of a more competition-based regime that is more flexible and exposes organisations to mergers and acquisitions 
 to a greater extent would lead to competitive intensity and hence to greater efficiency. 
 It is all very well for the Minister to refer to business not taking on extra burdens, but we must move towards greater competitive intensity. I do not like deregulation for the reason that it lets people do what they like; I like it because it lets people do what the market dictates. It makes people responsive to customers, as distinct from to rules. It enables us to move to a position that is more responsive to customers, which the clear set of rules that the Government, and industry to some extent, cleave to do not. The incumbent regime creates a sense of predictability, but predictability in business is not what we want. We want to create competition and improve responsiveness to customers. 
 I do not intend to press on with my argument, first, because I think that it will be taken up in another place and it is probably better that it should be. Secondly, although the amendments and the new clause are not technically deficient in themselves, we must include such provisions in clause 373 on enforcement. We could then apply rules relating to, for example, the appointment and dismissal of editors for a broadcasting organisation as for a newspaper organisation. As I have not tabled the necessary new clause to amend schedule 8 of the Enterprise Act, I think that it would not be best to pretend that I could amend the Bill now, but leave that to others to take up later. 
 The Minister did not deal with the questions about the benefits that might flow from Ofcom recommending a move in such a direction. For example, instead of the specific disqualification of religious organisations, it would enable us to behave in a non-discriminatory fashion and deal with individual bodies and people, not discriminate against them because of their religious affiliations. We could deal with people with extreme views of a political or religious character, who are not affiliated to religious organisations. The Government know that the measure is a loophole. They just happen not to be embarrassed by it. 
 If someone like Mr. David Sullivan were acquiring an organisation in the broadcasting sector, licence conditions would apply. They would constrain the owner of a broadcasting organisation, whereas there are no licence conditions that would constrain a person acquiring a newspaper. To say that that does not change the character of a broadcaster's outlook over time would be misleading. It does. If that were not so, why on earth would the Government continue to have media ownership rules? There is a public interest to be dealt with, and it is just a matter of whether we go down a more flexible route to do so or take the other route. We clearly want a flexible way in which to proceed. The amendment would improve the Bill to a great extent. I hope that, before its passage is concluded here and in the other place, we will see changes in that respect. I look forward to that. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Kim Howells: I beg to move amendment No. 668, in
clause 377, page 320, line 44, leave out 'members' and insert 'persons'.
 The amendment corrects an error. Obviously, the reference to ''members'' does not make sense in that context. The intention is that Ofcom should publish its report and bring it to the attention of persons who, in its opinion, are likely to be affected by it. The amendment would give effect to that. 
 Amendment agreed to. 
 Clause 377, as amended, ordered to stand part of the Bill.

Clause 378 - Penalties imposed by OFCOM

Nick Harvey: I beg to move amendment No. 524, in
clause 378, page 321, line 4, after 'in', insert— 
 (a) entertaining a complaint that may lead to a penalty; 
 (b) considering such a complaint; 
 (c) determining whether a penalty should be imposed; 
 (d) '.

Roger Gale: With this it will be convenient to discuss
 Amendment No. 525, in 
clause 378, page 321, line 19, after 'determining', insert— 
 (a) whether to entertain a complaint that may lead to a penalty; 
 (b) the consideration of such a complaint; 
 (c) whether a penalty should be imposed; 
 (d) '.

Nick Harvey: Clause 378 requires Ofcom to publish and consult on the procedures that it will follow if it is inclined to impose a penalty under the Bill, and to consult if it wishes to review such procedures. The amendments would extend the range of procedures on which Ofcom should consult to the process of deciding whether or not to entertain a complaint, whether to counter it and whether it should result in a penalty—not just concentrate on how large the penalty should be. Ofcom should be required to operate in accordance with natural justice, to follow best practice and to employ open procedures when considering complaints that may lead to it imposing a penalty. It should have clearly set out procedures for deciding in what circumstances it will consider complaints, how it will deal with them when it has decided to consider them, and how it will decide if a penalty needs to be imposed as well as how much the penalty should be.
 It is not difficult to imagine the elements of those procedures. The specific complaint and the person or persons who will make the decision should be clearly identified. There must be opportunities for the licensee and the person making the complaint to make appropriate representations, and an adjudication should be circulated in draft, so that all parties can comment on it. I am not suggesting that Parliament should decide on such procedures. It would be for Ofcom to do that, but it would be reasonable for Parliament to make it a requirement that Ofcom has such procedures, for them to take the form of a 
 published document and for Ofcom to consult on such procedures before adopting them. 
 If Ofcom is to use its powers to impose penalties, it is important that it allows all elements of the process to be followed. It is of limited use to have procedures to deal with how a penalty should be imposed if the process the regulator follows in deciding to impose a penalty is not clear and open. In recent years many regulators, as public authorities, have understood that they have to operate within the letter and the spirit of the Human Rights Act 1998, with its emphasis on transparency and proper, fair procedures. It is right that Ofcom should have fair, open and transparent procedures for dealing with something as significant as the imposition of the penalties. The objective of the amendment is relatively straightforward. I am interested to hear what the Minister has to say.

John Greenway: On a point of clarification, will the Minister confirm that there is no measure in the Bill for Ofcom to impose costs as well as penalties on those persons whom it decides are in breach of the provisions? I shall want to return to this important issue when we discuss Ofcom's finances. It is very important that we clarify whether Ofcom has the power to impose costs as well as penalties. As the Minister knows, if it imposes costs, those costs will defray Ofcom's administrative expenses that would otherwise be paid by those who pay fees to Ofcom, whereas penalties will all go to the Treasury.

Stephen Timms: The hon. Member for North Devon has pointed out the aims of these amendments, and I would not disagree with them. It is right that Ofcom should adopt and follow transparent, fair and consistent procedures when handling complaints. These are particularly important considerations for those involved in complaints that could result in the imposition of a penalty. I hope that I can persuade him that it is not necessary, or indeed desirable, to make further specific provision for that in the Bill. There are already a number of provisions covering the matters to which the amendments relate.
 One of Ofcom's general duties in clause 3, to which it will be required to have regard when carrying out any of its statutory functions, is that of best regulatory practice. That encompasses the issues about which the hon. Gentleman expressed concern, such as fairness, transparency and the handling of complaints. 
 We have actually gone much further than that in a number of respects. Clause 3(3)(b) imposes a more specific duty on Ofcom to have regard to 
''principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed''.
 I could also point to some of the measures under clause 8 in which we have gone a good deal further. 
 The existing sectoral regulators already publish a substantial amount of guidance material on how they will deal with complaints under the legislation for which they are responsible. That is readily available through websites and telephone helplines. Interested parties have had an opportunity to comment on and 
 influence that material, but it is tailored to the particular sectoral regimes and the structure and procedures of the bodies responsible for enforcing them. Ofcom should be given some space to consider what, if any, revision and expansion might be needed to reflect the different requirements and functions under the new regime and the new organisational structure that will operate it. 
 The Secretary of State is not formally involved in the publication of complaint handling guidance by the sectoral regulators at present. I do not think there is a good reason for micro-managing Ofcom's procedures more closely than is the case with the existing regulators. On the contrary, now we are creating Ofcom as an independent regulator within a framework that we have laid down but which will otherwise operate at arm's length from Ministers, we ought if anything to be less prescriptive, rather than involving Ministers more in these detailed operational matters. 
 Ofcom needs to be able to act flexibly and quickly in response to the demands of the rapidly moving environment and market in which it operates. The amendment could restrict its ability to do so without producing significant countervailing benefits. 
 I hope that the hon. Member for North Devon will recognise that it is significant that the new rights of appeal that we are introducing will make it even more important than before that the regulator can demonstrate that it has handled complaints fairly, transparently and consistently. It would be difficult for Ofcom to demonstrate compliance with those requirements in the absence of proper, clear statements of policy and practice on those matters, or if it failed to abide by such statements without good reason. The hon. Gentleman's amendments raise important points, but I hope that he can take sufficient reassurance from my comments to withdraw them. 
 The hon. Member for Ryedale (Mr. Greenway) asked whether costs can be imposed. They cannot be imposed in penalty cases.

Nick Harvey: I am grateful to the Minister for his reply. I take on board his point that the general provisions in the Bill perhaps provide for such procedures, and he stated that he anticipates that Ofcom will use those general provisions as I have suggested it should, which was useful. Therefore, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Andrew Lansley: I beg to move Amendment No. 680, in
clause 378, page 321, line 14, leave out 'and' and insert— 
 '(aa) the Office of Fair Trading; and'.

Roger Gale: With this it will be convenient to discuss Amendment No. 681, in
clause 378, page 321, line 22, at end add 
 'and to any decision made by the Competition Appeal Tribunal as regards the application of the guidelines and the imposition of penalties, as OFCOM consider relevant.'.

Andrew Lansley: I hope that these amendments will be a little simpler to deal with than the opening group.
 My first point arises from a discussion that we had a long time ago in these proceedings. I was wondering about the deterrent effect. Is it intended that a deterrent effect is to be included in the penalties that would be imposed by Ofcom in relation to certain conduct or contraventions of licence conditions, because it explicitly forms part of the penalty regime in relation to the Competition Act? 
 That question led me to examine how penalties are constructed in clause 378. Perhaps all that will be in the guidance that Ofcom will publish. The statement will be published in due course. Under section 38 of the Competition Act, the Office of Fair Trading publishes guidance on the penalties in the legislation, which will be used by Ofcom. It might be assumed that Ofcom will have regard to the published guidance from the OFT in relation to penalties under the Competition Act, because they are inexactly complementary. However, nothing in the legislation requires it to do so. Amendment No. 680 proposes that Ofcom must consult with the OFT before it makes its statement on penalties. 
 I turn to Amendment No. 681. Committee members will be pleased to learn that I have not brought with me the judgment in the Napp Pharmaceuticals case, so I cannot bore them by explaining the considerations that go to make up a penalty in such a case. However, I assure them that they are relatively complex. 
 The Competition Commission upheld the OFT's decision, but it did not agree with the calculation of the penalty. A substantial part of its judgment was a re-calculation of that penalty. Given that that was pretty much the first case under the Competition Act, as the Minister rightly said, there is the possibility of a substantive appeal on the merits of many of the issues in this legislation, which in due course will go to the Competition Appeal Tribunal—which is the same body as the Competition Commission for these purposes. Therefore, penalty calculations may well become part of case law in relation to Ofcom's decisions. The Minister may tell me that Ofcom will of course be bound to have regard to the decisions made by the Competition Appeal Tribunal, but I am not sure why the ''of course'' argument applies, and why it would not be desirable to refer to it in the Bill. 
 I looked for a comparable provision in the Competition Act 1998, but it is not quite the same. Section 38(9) is slightly different and says: 
''If a penalty or a fine has been imposed by the Commission''—
 that is the European Commission— 
''or by a court or other body in another Member State in respect of an agreement or conduct, the Director, an appeal tribunal or the appropriate court must take that penalty or fine into account''.
 That looks for complementarity with the European competition regime. 
 I might be missing an answer, but it is desirable that we are clear that Ofcom should take account of decisions made by the Competition Appeal Tribunal on penalties when it sets or revises its statement on penalties. I hope that the Minister will either accept the amendment or reassure us that that will happen.

Stephen Timms: The hon. Gentleman has accurately anticipated my line of response. Amendment No. 680 would place an express requirement on Ofcom to consult the Office of Fair Trading before publishing the guidelines on penalties. Such consultation is not precluded by the clause. On the contrary, subsection (4)(b), which would come immediately after the insertion proposed in the amendment, provides that Ofcom must consult
''such other persons as they consider appropriate''
 in addition to the Secretary of State before publishing guidelines or amendments to them. If there was a situation in which input from OFT would be appropriate—the hon. Gentleman mentioned such situations—Ofcom will consult it. No doubt Ofcom and OFT will want to liase closely over any aspects of the penalty guidelines and their application should issues of consistency with penalties imposed by OFT arise. 
 It is worth bearing in mind the fact that the circumstances in which such issues could arise are fairly limited. The power and duty to publish guidelines on penalties under the Competition Act 1998 remain reserved to OFT despite the fact that Ofcom will have concurrency. Other regulators, including Ofcom, are required to follow OFT, so there is no question of inconsistency. 
 There is no concurrency for OFT with regard to powers in the Broadcasting Act 1996, the Wireless Telegraphy Acts or the sectoral regime for networks, services and spectrum in the Bill, because Ofcom alone will exercise those powers. OFT has little enforcement knowledge of many other aspects of Ofcom's remit, such as broadcasting content or telecoms consumer protection. Nevertheless, if appropriate, subsection (4)(b) requires Ofcom to undertake consultation. I hope that that reassures the hon. Member for South Cambridgeshire. 
 Any decision that Ofcom takes on a specific case will be subject to an appeal on its merits, so there is no risk of injustice in practice. If the consistency and appropriateness of penalty guidelines—whether with OFT or otherwise—needs to be reviewed by an external authority, that can be more properly achieved through the requirement in subsection (5) for Ofcom to consult the Secretary of State. She could look across all regulated sectors and take account of a wide variety of considerations that are not all in the remit of either OFT or Ofcom. 
 In speaking to amendment No. 681, I shall probably use the ''of course'' response that the hon. Gentleman suggested, although I shall use a slightly different form of words. It goes without saying that Ofcom will have regard to relevant appeal decisions, but it may be reassuring if I make the matter explicit. If Ofcom did not do that, any subsequent decisions that were inconsistent with case law would be likely to lead to appeal and could be struck down. That is a powerful incentive for Ofcom to ensure that it has regard to the appeal decisions. 
 In the light of that reassurance, I hope that the hon. Gentleman will withdraw the amendment.

Andrew Lansley: I am glad to have the Minister's reassurance. I understand that concurrency does not relate to all issues, so Ofcom would have to make a statement about guidance.
 The mechanisms that relate to the calculation of penalties may be similar to the guidance that the OFT issues on penalties under the Competition Act. The contraventions of licence conditions and the contraventions of prohibitions in the Competition Act could appear similar in some respects. It will make transparent good sense and it would be appropriate for Ofcom to consult the OFT about the setting of penalties, and I do not doubt that it will do that. As is the case with amendment No. 681, in due course everyone must be reminded that that is how they should go about things. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 378 ordered to stand part of the Bill.

Clause 379 - General restrictions on disclosure of information

Question proposed, That the clause stand part of the Bill.

John Whittingdale: I shall be brief. It strikes me that the clause is thoroughly desirable in principle, in that it would, according to the explanatory notes
''impose limits on the disclosure of information relating to the affairs of any particular business obtained under the Bill.''
 That could be very important to businesses, because the information that they are being required to disclose may often be commercially sensitive and may be of value to their competitors if it were disclosed. Subsection (1) seems entirely sensible, because it prohibits the disclosure of such information while the business in question is still being carried on, unless consent has been obtained from the person responsible for it. However, I am concerned about the subsequent subsections. The explanatory notes tell us that subsections (2) to (5) provide for a limited number of exemptions. However, subsection (2) says: 
''Subsection (1) does not apply . . . for the purpose of facilitating the carrying out by OFCOM of any of their functions''
 and 
''for the purpose of facilitating the carrying out by any relevant person of any relevant function''.
 In subsection (3), the relevant persons turn out to be the entire panoply of the regulatory apparatus of the state, including 
''any other person specified for the purposes of this subsection in an order made by the Secretary of State.''
 Relevant functions turn out to be 
''any function conferred by or under this Act'',
''any function conferred by or under any enactment or instrument mentioned''
 and 
''any other function specified . . . in an order made by the Secretary of State.''
 Under the subsequent subsections, information should not be disclosed unless the Government decide that it 
 should, in which case they would disclose it. Perhaps the Minister will give me some reassurance that the clause provides the proper protection, because it appears not to.

Stephen Timms: I can give the hon. Gentleman that reassurance. We are living in an era of concern about freedom of information. Indeed, we have legislated on that subject and we would not wish to allow information to be withheld that ought to be available. I agree with the hon. Gentleman that information about businesses that is significant and sometimes sensitive should be responsibly handled. The purpose of the clause is to give businesses as much certainty as possible about how the information may be used. Subsection (1) sets out a basic prohibition on the disclosure of any such information while the business to which it relates is being carried on.

Michael Fabricant: The Minister mentioned the Freedom of Information Act 2000—we will all have to disclose our expenses. What comfort can he offer to companies that information given to Ministers of the Crown in so-called confidence will not be disclosed under the provisions of that Act?

Stephen Timms: The normal arrangements under the Freedom of Information Act will apply. There are concerns, but when the Government hold information to which citizens should have access, provision should be made for it to be available. The clause provides precisely the reassurance that the hon. Member for Maldon and East Chelmsford seeks.
 The hon. Member for Lichfield asks whether the clause is sufficient to reassure those who may be concerned, to which the answer is yes. The Freedom of Information Act does not permit disclosure of information that is prohibited by other Acts, such as the provision in this clause. That provides the balance that we all want. 
 Question put and agreed to. 
 Clause 379 ordered to stand part of the Bill. 
 Clauses 380 to 383 ordered to stand part of the Bill.

Clause 384 - Repeal of certain provisions of the Telecommunications Act 1984

John Whittingdale: I beg to move amendment No. 693, in
clause 384, page 327, line 1, leave out paragraph (b).
 This is to some extent a probing amendment. We seek an explanation from the Government as to why they propose to repeal the power that local authorities currently have under the Telecommunications Act 1984 to contribute to losses incurred by public telecommunication operators in the provision of facilities for their areas. Under section 97 or the 1984 Act, if local authorities think that it would benefit their areas, they can contribute to losses sustained by an operator in providing additional telecommunications facilities or continuing to provide existing ones. Sub-section (4)(b) repeals that provision. It is not apparent why that power should be removed from local authorities. I can envisage circumstances in which a local authority might argue that it is a useful power. 
 Earlier in the Bill, we spent a long time talking about the desirability of broadband for the public interest. That national interest goes beyond the wish of an individual to have it. It is possible that a local authority might consider helping a telecommunications operator to roll out broadband.

Brian White: The hon. Gentleman may wish to know that my local authority is considering the possibility of helping British Telecom to solve the problem of broadband provision in Milton Keynes.

John Whittingdale: The hon. Gentleman raises an interesting point that makes my amendment more practical and immediate, and not just probing, as I originally suggested. It could be argued that a contribution from public funds could be defined as state aid, which would be in contravention of Community rules, but that is a matter for the European Commission. Local authorities may want to give assistance that would not breach the state aid rules, but they would be prevented from doing so under the terms of the Bill as drafted. Will the Minister explain why the power should be removed, and address the point made by the hon. Member for Milton Keynes, North-East (Brian White) that it may impinge on discussions currently under way?

Stephen Timms: I sympathise with the hon. Gentleman's puzzlement, particularly as earlier in the Committee we had a debate in which we envisaged that local authorities would have a wider ability for action, as is the case in the constituency of my hon. Friend the Member for Milton Keynes, North-East. The provision is being removed because there is now more general legislation conferring broader powers on local authorities.
 Hon. Members will recall the Government's decision to give that broader power to local authorities so that they could take action in the interests of their communities, and the powers of local authorities in England and Wales were extended under the Local Government Act 2000. As that Act confers on authorities the power under discussion and others, section 97 of the 1984 Act is redundant in respect of England and Wales. The Local Government in Scotland Bill will make it redundant in respect of Scotland for the same reason. However, Northern Ireland does not have similar local government legislation. The effect of section 97 has therefore been preserved in Northern Ireland by means of clause 145 of this Bill.

John Whittingdale: That is a helpful explanation of why the Government are removing the provision. If I understand the Minister correctly, he is saying that legislation subsequent to the Telecommunications Act 1984 has reinforced the power, so we can remove the original empowerment. On that basis, I am happy to beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 384 ordered to stand part of the Bill. 
 Clause 385 ordered to stand part of the Bill.

Clause 386 - Destination of licence fees and penalties

Question proposed, That the clause stand part of the Bill.

John Greenway: This is an important clause, which replicates existing practice across several public bodies, so that all the money received by Ofcom from penalties, licence fees or the sale of radio, telecommunications or television spectrum will incontrovertibly, and quite properly, go to the Treasury. However, as we saw with the 3G—or third generation—mobile phone licences, the amounts of money can be substantial.
 We should briefly air some issues that will be of practical value, and may be controversial in years to come. The Bill gives Ofcom several powers to charge penalties to organisations that are found to be in contravention of the Bill or licence obligations, or that have abused the significant market power conditions. We have debated such matters as we have gone through the Bill. In some instances the sums are not particularly great, but in others, such as in clauses 92 and 93, under which penalties can be imposed for contravention of significant market power or licence conditions in telecommunications, the penalty will be some 10 per cent. of the turnover of the relevant business. In the case of a major mobile telephone company, that would be a substantial sum. Similarly, under clause 231, penalties for licence condition contraventions in broadcasting could be as much as £250,000, or 5 per cent. of qualifying revenue. Potentially, those substantial sums would go to the Consolidated Fund and to the Treasury. 
 Three issues arise from all this. I touched on the first in an earlier intervention and I am grateful for the Minister's clarification because, at the very least it confirms that I have correctly understood the Bill's provisions. There appears to be no mechanism in the Bill for Ofcom to recover costs from companies that are in contravention of its various provisions dealing with licence conditions and so on. I have some experience of that in a regulatory sense, and I shall explain the difficulty. 
 I was for 10 years an elected member of the Insurance Brokers Registration Council, which was abolished when the Financial Services Authority was created. The FSA is consulting on how it intends to regulate the general insurance market, particularly intermediaries and brokers. The Insurance Brokers Registration Council was established in 1977 by an Act of Parliament that gave the council no powers whatever to impose fines or recover costs from firms that were found to be in breach of some element of its regulatory provisions. The effect of that was that to some extent firms were not as co-operative as they might have been when investigations of malpractice were being carried out, but the real practical damage was that the cost of all this supervisory and investigative work fell on the rest of the council's members, as it had to be covered in their membership fee. 
 There is a very real danger that the same problem will arise with Ofcom. We are giving Ofcom huge 
 powers to investigate potential malpractice—whether it is broadcast companies failing to fulfil their licence obligations or the abuse of significant market power and other licence conditions in the telecommunications sector. I am sure that I do not need to labour the point. It will be time-consuming work. It may not always result in penalties being imposed or people being found to be in breach. We understand that that is part of Ofcom's general duty to supervise the entire marketplace in telecommunications, broadcasting and the media. If the sums involved in this investigative work become substantial, why should the organisations that effectively fund Ofcom's day-to-day work through the administration fees that they are obliged to pay have to contribute to that? Had the Bill given Ofcom the power to recover costs as well as to impose penalties, this problem would not arise. 
 It will add insult to injury when the accounts that the clause requires are published and people see the amount of money that has been paid into the Consolidated Fund from Ofcom, yet the membership has to pay the cost of all the investigative work and the cost of bringing proceedings against firms that may be in breach. They are likely to ask why they are giving all this money to the Treasury and yet also have to pay for the work that creates the penalties, which then go into the Consolidated Fund. 
 I may be exaggerating the extent to which Ofcom will use the powers and penalties, and experience will determine whether I am right or wrong. It may be that the problem that I envisage will not occur, but one simply does not know. As the Bill proceeds through Parliament it is important for us to consider whether we are making an error in not providing Ofcom with the power to recover costs from those on whom it imposes penalties. This is the clause stand part debate: I am not seeking to press this point today—but I hope that the Minister will reflect on it. It might even be the subject of some consultation with those affected. 
 The costs of investigation are very substantial for regulators. It is incongruous that the industry as a whole pays for this work, and yet the penalties that are imposed as a result go straight into the Treasury's coffers: there is no mechanism to defray the costs of that investigative work against those penalties. 
 Secondly, there may be a case for us considering whether it is right that all the money, particularly the licence fees, goes straight to the Consolidated Fund. I have the germ of a thought: whether we could consider using some of this money—not a substantial amount—to fund some of the many good causes that have been debated throughout the proceedings of this Committee. We have had ideas for things of social value that we would like to do in the media industry, but there is not the money to pay for them. For example, there is the cost of improving access for the blind, partially sighted, deaf and elderly through developments in the design of new technology. Everyone acknowledges that there is huge value and benefit to be obtained from such work and developments, but how do we pay for it? That is perhaps why progress in this area has been slower than 
 some of the organisations representing disadvantaged people might prefer. Maybe a small amount of money could be put aside for that. 
 Thirdly, there is access and community radio. The Minister has admitted that it is difficult to see exactly how this will be funded and some of the suggestions that were made were not accepted. I was left with the overwhelming feeling that if a small amount of money—only a few million pounds—could be set aside for access radio then we might see it develop in a way that does not impinge upon the commercial success of independent radio stations that have paid some of this money through the licence fee to be on the air in the first place. We have talked about investment and innovation in radio and television programmes and the difficulty of people with good ideas gaining access to resources with which to develop them. We have talked about the need to improve training within the broadcasting industry. We have also talked about research. Clause 13 gives Ofcom a duty to undertake research, but it does not actually say where the money to pay for it will come from: but it is a duty none the less. 
 These are areas where it is sensible for us to pause for thought and consider whether in the fullness of time it would be beneficial to introduce a small levy or other mechanism to set aside some of the money, particularly that which comes from penalties imposed on companies involved in malpractice, for a fund from which grants could be made to some of the good causes that I have enumerated. 
 Finally, I come to what is probably the most compelling point in support of my argument—the fact that the Bill allows the BBC to suffer penalties. We agree wholeheartedly that the BBC should be liable for penalties. That is one of the means by which it can be properly supervised.

John Whittingdale: Not enough.

John Greenway: My hon. Friend says not enough, but if I understand the Bill correctly, the penalty could be £250,000, and that is not an insubstantial sum. That money would have been paid by licence-fee payers, and so would have been extracted from the public on pain of criminal sanction to ensure that we have a vibrant public service broadcaster, across the broadcast sector, on both television and radio. Given that the Ministers have accepted that penalties should apply to the BBC, is it appropriate that any such penalty levied should go straight to the coffers of the Treasury? Should the money be set aside for some of the good causes that I have outlined?
 You have been extremely patient, Mr. Gale. I think that I have said enough to show that there are some loose ends to which Ministers have not yet turned their attention.

Chris Bryant: ''Loose Ends'' on a Saturday morning.

John Greenway: If the people who appear on that programme were sitting in the Gallery, they would endorse what I have said wholeheartedly, for the simple reason that those are people who want innovation in broadcasting.

Anne McGuire: Ned Sherrin.

John Greenway: That is precisely the person I was thinking of.

Michael Fabricant: He has been moved to six o'clock.

John Greenway: He still presents the programme, but has been moved to six o'clock.
 I think that I have made the point that there are loose ends to be tied up. I understand the difficulty of administering such an arrangement across the industry given the regulatory structures currently in place. However, given that we are creating a single overarching regulator for the entire media and telecommunications industry with all the power and influence that Ofcom will have, surely it would not be beyond the wit of man to devise an arrangement whereby some of the money levied could be set aside to fund the many worthy causes that I have outlined. I commend that thought to the Minister.

Stephen Timms: I listened with great interest to what the hon. Gentleman said, and was particularly struck by the clear distinction that he drew between good causes on the one hand and the Treasury on the other as opposites on a scale of virtue. As a former Treasury Minister, that is a dichotomy that I would not accept.
 Let me explain why we have provided for penalties to be paid to the Consolidated Fund. We want to avoid giving Ofcom any incentive to impose penalties in order to raise income for its activities, as well as the perception that that might be the reason why Ofcom wanted to impose a high penalty. I think that the same could be said if there were a specified list of good causes for which a proportion of the penalties would be made available. That is not to say that I do not have sympathy with some of the causes that the hon. Gentleman listed. Hon. Members will have been impressed by representations that were made during the lobby that was organised on Tuesday by the Royal National Institute of the Blind. 
 Some elements of Ofcom's work comprise new activities—for example, in the area of media literacy—and perhaps some of those cannot be covered from fees and charges. A number of them may need to be funded by the Government—the Treasury also funds good causes—by various routes. Should there be any shortfall in funding in respect of the new Ofcom activities, such as media literacy, the Government would need to provide support through grants. We have constructed the system correctly. We are not providing any incentive, or any perception of an incentive, for Ofcom, in its own interest or that of the causes it supports, to impose higher penalties than would otherwise have been imposed. 
 In some areas, we make provision for Ofcom to recover its costs—for example, in relation to disputes. As I said earlier, there is no provision for costs in cases in which penalties are imposed. Our view is that enforcement is an essential part of a regulated market, and is part and parcel of maintaining the regulated system. It is more appropriate that the enforcement costs are spread across all the licence holders and those 
 who are authorised to carry out services, as is the case for the other regulators such as Ofgem. That is a principle that one could debate, but our view—taken widely and not just in this case—is that maintaining enforcement in the market should be a cost and a benefit to everyone. I understand the force of the argument that only the guilty should pay, but our view is that the measure is an essential part of regulating the market, so it is appropriate that the costs of that {**?tw=.99h**}any problems with that arrangement with the existing five regulators, or with comparable bodies like Ofgem.{**?tw**} 
 Question put and agreed to. 
 Clause 386 ordered to stand part of the Bill.

Clause 158 - Payments for use of radio spectrum by the Crown

Question proposed, That the clause stand part of the Bill.

Michael Fabricant: The clause is welcome. We have, in previous sessions, discussed the problem of the BBC squatting on frequencies. I have previously mentioned access radio, which is licensed by the Radio Authority and has been impeded by the BBC sitting on frequencies. The lack of a fourth independent national radio network was caused by the BBC sitting on a frequency in Essex—if only they had just changed the frequencies across. The clause is welcome because it concerns the use of frequencies by the Crown, not by the BBC.
 I seek some clarification from the Minister. It has been argued that the Ministry of Defence has sat on frequencies unnecessarily, preventing their use by commercial organisations, which range from taxis and security firms to the emergency services—the ambulance service, the fire brigade and the police. The long, tragic history of telecoms in the defence industry is part of the problem. The change from VHF to UHF was necessary, and now there is the somewhat urgent need, given the present position, for MOD personnel to change to digital encrypted transmissions. It also needs to have a system that is compatible with that of our US partners, which our system is not, on the whole. The problem is that during the transition the Ministry of Defence sits on frequencies that it uses for the old system while it has frequency allocations for the new system. I guess that the point of clause 158 is to provide an incentive for the Ministry of Defence to relinquish the frequencies that it does not need and to allow spectrum to be freed up for broadcasters and for emergency and commercial organisations that require telecom spectrum. 
 I have noted that the clause is a logical progression from the Wireless Telegraphy Act 1998. However, I return to the same old question that I asked on Tuesday. Which Secretary of State does it refer to? Several of my colleagues told me that it was any Secretary of State, but the Minister for Tourism, Film and Broadcasting did not make that clear. 
 Subsection (1) says: 
''The Secretary of State may, out of monies provided by Parliament, make payments to OFCOM of such amounts as he considers appropriate''.
 It is important to know which Secretary of State that is. If it is any Secretary of State, the Defence Secretary might decide the appropriate amount in the example that I gave about the Ministry of Defence. I suggest that he would not be keen to pay a large sum because that would come out of his budget. If that is the case, the clause has no real power. If the relevant Secretary of State is the Secretary of State for Trade and Industry or the Secretary of State for Culture, Media and Sport, that is a different matter because I assume that either Secretary of State would have the interests of the whole community at heart, and a large fee might be charged to the Ministry of Defence. I use the Ministry of Defence only as an example, because other Government agencies frequency squat. 
 We need clarification on that and on the extent to which the Secretary of State would take public interest into account. To what extent will the Secretary of State make charges to ensure that frequency squatting is eliminated whenever possible?

Andrew Lansley: I can help my hon. Friend while I make my remarks because the Joint Committee had more or less the same set of questions as he has.
 The Crown does not require a licence, so it does not have to pay for one. However, since the introduction of spectrum pricing in the Wireless Telegraphy Act 1998, and in order to maintain consistency in the system, Government Departments have chosen to make payments within Government to the Radiocommunications Agency of comparable amounts to those that would have been paid if a licence had been required. The Cave review said that that sum paid by the Ministry of Defence was £25 million in 2000–01, which shows that we are not dealing with insignificant sums. 
 The provision is in the Bill, because we are shifting from a payment within Government, which was not legislated for in the Wireless Telegraphy Act, to a payment to an agency—Ofcom. That must be reflected in legislation. 
 The Joint Committee thought that the provision was insufficiently transparent. A negotiation of a kind currently occurs within Government between Government Departments and the Radiocommunications Agency. Paragraph 184 of the Joint Committee report said: 
''We recommend that the Government ensure, by means of amendment to Clause 119''—
 it was clause 119; it is now clause 158— 
''if necessary, that there is transparency about the means by which payments by Government departments are calculated.''
 However, the Government's reply is that the process will be transparent, because Ofcom's accounts will show payments by Government Departments, so there will be transparency to that extent.

Michael Fabricant: I am grateful for that information. I will ask my hon. Friend the Member for South Cambridgeshire. Perhaps he knows even more than the Minister. When the clause refers to the Secretary of State, which one does it mean? Does it
 mean one of the two Secretaries of State responsible for Ofcom, or does it refer to the Secretary of State responsible for the Department making the payment? In that case, it is hardly a deterrent against squatting on the frequencies.

Andrew Lansley: Legally, the Secretaries of State are one, but in this case, it would be the Secretary of State for the relevant Government Department.

Michael Fabricant: We are saving the Minister's voice by having a discussion among ourselves. My hon. Friend mentioned transparency, but what sort of disincentive is there for the Ministry of Defence?

Andrew Lansley: We will come to that substantive point. Why should the MOD hand spectrum over? In discussions inside Whitehall, there is a Cabinet Committee, the purpose of which is to have precisely this type of discussion and to organise the proper co-ordination of defence and non-defence use of radio spectrum. Part of that includes trying to ensure that the MOD does not sit on more spectrum than it really requires.
 According to the evidence given to the Joint Committee, the Cabinet Committee is jointly chaired by the chief executive of the Radiocommunications Agency and a senior official in the MOD responsible for defence spectrum use. I presume that it will continue in a comparable form, but will include a senior official from Ofcom rather than the chief executive of the Radiocommunications Agency. However, we are changing the regime for the Wireless Telegraphy Acts 1949 and 1998. 
 The structure of clause 158 includes something new: payments in respect of the grant of recognised spectrum access. Whereas the Crown does not require a licence, just as other users of spectrum might find it desirable to have a grant of recognised spectrum access so might the Crown, especially in cases of non-exclusive use and when there may be problems related to interference. 
 We can reasonably assume that Government Departments will not only be paying comparable amounts for licences, but comparable amounts for grants of recognised spectrum access. Two questions arise from the clause. First, how does one know what is comparable? We have had spectrum pricing and there is an art as well as a bit of science in trying to arrive at the appropriate incentive price for the use of spectrum. However, the Government's stated preference, wherever possible, is to use an auction as the basis of spectrum allocation by way of pricing. 
 It can be difficult to predict how much spectrum is worth by way of auction. The auction for third generation licences demonstrated that the Government were capable of significantly underestimating the value of that spectrum, and subsequent auctions have demonstrated that it is possible to significantly overestimate it. The question of whether the Government Department is paying the right amount is difficult to answer. Alternatively, will some new mechanism be applied to derive the comparable amount? 
 Secondly, for the sake of argument, let us suppose that Departments have the equivalent of licences for use of spectrum and a grant of recognised use of spectrum access. Legally, under the legislation, they will be able to trade it, which is new. We have never had spectrum trading before. Should the MOD find that it has more spectrum than it needs, it has two options. It can hand back the spectrum to Ofcom so that it can be allocated elsewhere, or sell it for profit. 
 Which of those options will the MOD take? The implication of the evidence given to the Joint Committee was that in those circumstances the Ministry of Defence would be inclined to hand it back rather than to sell it, but it would be interesting to know which the Minister thinks will happen. We are not going to bind legally Departments' behaviour, but if the spectrum were handed back to Ofcom rather than sold, that would be consistent with the regime generally.

Michael Fabricant: As my hon. Friend knows, I have considerable sympathy with the Ministry of Defence and I am the proud owner of a Royal Marines dagger. However, is it not the case that the Ministry of Defence rarely gives up land and often considers that there is no such thing as excess land? What makes my hon. Friend believe that it is ever going to think that it has got excess spectrum?

Andrew Lansley: I believe that because the experience of recent years suggests that the Ministry of Defence has both become more open to the argument that it is sitting on spectrum that it ought not to sit on and become somewhat incentivised by the payment: £25 million is not an insignificant sum, so the Ministry of Defence, or the Defence Logistics Organisation, has an incentive. If my hon. Friend is asking whether I am absolutely confident about the outcome, the answer is no, but in recent years the tendency has been to move in the right direction.
 The Government resisted the idea that Ofcom should determine the amounts that were payable in the same way as they would in relation to incentive pricing. They are leaving the power to do that to Government. It will be transparent in so far as we will see the amounts that Government Departments pay for spectrum, but not transparent in so far as we will not necessarily understand the mechanism by which that amount has been determined. That is one of my key questions with regard to the Government's use of spectrum; the other relates to the application of spectrum trading.

Stephen Timms: That has been an illuminating discussion. The position is more or less as it was set out in that exchange. At present, non-Crown users are required to have a Wireless Telegraphy Act licence except where the use has been exempted by regulations. Except where there has been a spectrum auction, the level of fees for licences is set out in regulations, which, under the Bill, will be made by Ofcom. Since the introduction of spectrum pricing in 1998, those fees have increasingly reflected the economic value of the spectrum.
 As the hon. Member for South Cambridgeshire said, the Crown is not bound by the legislation to have 
 a licence to use spectrum. The Crown is a significant user of spectrum, and the Ministry of Defence accounts for about 28 per cent. of the spectrum. We have applied the principle that Government Departments should have the same incentives with regard to spectrum efficiency as commercial users. Therefore, Ministers agreed from the introduction of spectrum pricing in 1998 that Government Departments would pay for their spectrum on a comparable basis, and that was strongly endorsed by the independent review of radio spectrum management that was carried out for us by Professor Cave. 
 We have talked a lot about the Ministry of Defence. Under an agreement between the it and the Radiocommunications Agency, it pays for spectrum on a comparable basis to the private sector, as has been said, and there are similar arrangements for Customs and Excise, the Department for Work and Pensions and other Departments. I wish to underline the point made by the hon. Member for South Cambridgeshire: if the Ministry of Defence surrendered some spectrum, it would no longer pay the charge, so there is a direct financial incentive for it to do so. 
 The question of how those payments would be determined was raised. In practice, that will be agreed between Ofcom and the Ministry of Defence. However, Government policy is that the Crown should pay a proper amount for its spectrum and that collective agreement will apply to the Ministry of Defence as it will to everybody else. The hon. Gentleman asked me to which Secretary of State the provision refers. We discussed that on Tuesday. As he was told, ''the Secretary of State'' can apply to any Secretary of State. If the Ministry of Defence were using the spectrum, the Secretary of State for that Department would pay.

Michael Fabricant: Surely that is precisely the point that I was making in my earlier speech. What incentive is there for the Secretary of State for Defence to charge his Department excess money, to act as a deterrent from sitting on those frequencies?

Stephen Timms: I was talking about the Secretary of State who should pay. In practice, the amount in payment is for agreement between Ofcom and the Ministry of Defence, but the principle that has been agreed across Government is that the payment should be on a comparable basis with payments made by the private sector.
 Transparency was mentioned by the hon. Member for South Cambridgeshire. We agree that it is desirable. We have set the principle that public sector users should pay on a comparable basis with the private sector. We do not need to go further than we have done to ensure continuing transparency in that area because the amount paid by Departments to the Radiocommunications Agency for access to spectrum is separately identified in the agency's report and accounts, and no doubt that practice will continue when the agency's responsibilities are taken over by Ofcom. That will provide the necessary level of transparency. 
 Finally, when the Ministry of Defence or the Crown wants to have the benefits of recognised spectrum access, the same will apply. The whole point of enabling the Crown to have recognised spectrum access is to enable spectrum access to be traded. Whether the Ministry of Defence or another Department would do the trading would be for it to decide in the circumstances at the time. However, there is nothing to prevent such trading from taking place—indeed, we would welcome it. 
 Question put and agreed to. 
 Clause 158 ordered to stand part of the Bill. 
 Clauses 387 to 391 ordered to stand part of the Bill.

Schedule 17 - Minor and Consequential Amendments

Stephen Timms: I beg to move amendment No. 309, in
schedule 17, page 465, line 45, at end insert— 
 '( ) In subsection (4), for ''specified under subsection (3) shall include'' there shall be substituted ''must include provision for''.'.

Roger Gale: With this it will be convenient to discuss the following:
 Government amendments Nos. 310 to 312.

Stephen Timms: These are drafting corrections. I should be happy to go into detail about the implications of them if members of the Committee wish me to do so, but I do not want to detain them unnecessarily. The amendments are minor drafting proposals, and I hope that they will commend themselves to the Committee.
 Amendment agreed to.

John Whittingdale: I beg to move amendment No. 123, in
schedule 17, page 472, line 42, at end insert— 
 'Parliamentary Commissioner Act 1967 
 36A In Schedule 2 to the Parliamentary Commissioner Act 1967 (departments and authorities subject to investigation), there shall be inserted (at the appropriate place in alphabetical order) the following entry— 
 ''Office of Communications''.'.
 It might be owing to a lack of imagination on my part, but I find it difficult to see how the Government cannot accept the amendment. However, they have a capacity to surprise me. The purpose of the amendment is simple. It would give the Parliamentary Commissioner for Administration, known to most people as the ombudsman, the ability to adjudicate on complaints against him. We, as Members of Parliament, have regular dealings with the ombudsman and refer to him complaints from constituents against Government bodies. That is a useful avenue of appeal when it seems that a Department or body has acted improperly, or that maladministration, negligence or delay has occurred. 
 The ombudsman is an important safeguard for consumers. He is entitled to investigate many matters, such as avoidable delay, faulty procedures, unfairness, bias, prejudice and giving misleading or inadequate advice. Most hon. Members consider it important that an independent body is capable of scrutinising the 
 actions of Departments and adjudicating whether they have behaved properly. 
 The list of Government bodies that the ombudsman is already entitled to investigate runs to many pages, and I shall not read out all of them, because that would take the rest of this morning's sitting and most of this afternoon's. The ombudsman has the power to investigate complaints against other regulators: it can examine the activities of the Office of the Director General of Water Services, the Offices of the Rail Regulator and of the International Rail Regulator, the Postal Services Commission and the Gas and Electricity Markets Authority. Ofwat, Ofgem, the OFT, Postcomm, Ofsted are in the ombudsman's remit, but also capable of being investigated is Oftel—the Office of the Director General of Telecommunications. Ofcom is replacing Oftel. In addition, the Broadcasting Standards Commission is on the list of organisations that the ombudsman can investigate. 
 Unless the Government accept our amendment, they will remove the ombudsman from areas in which he can currently investigate complaints, such as telecommunications regulation and the standards of broadcasting regulations. Given that they can see merit in allowing him to examine complaints about other regulators and a large part of the area of responsibility that Ofcom is taking over, I cannot understand how they can argue that Ofcom should be outside the remit of the Parliamentary Commissioner for Administration. Will the Minister think again and accept the amendment?

Richard Allan: I support the persuasive case made by the hon. Member for Maldon and East Chelmsford. Given the smile on his face, I expect the Minister to say that Ofcom's functions will be governed by the ombudsman or the Parliamentary Commissioner for Administration because, as has been rightly pointed out, such a service is much valued by citizens.
 People do not necessarily question the decisions that have been made, but the manner of the administration is often the reason why complaints are made to the ombudsman. I draw attention to notable Inland Revenue cases, in which people query its treatment of them. I can foresee circumstances in which individuals consider that Ofcom has treated them poorly and it would be appropriate to take such cases to the Parliamentary Commissioner for Administration. I hope that the Minister will accept the amendment, or tell us that some other part of the Bill provides that the ombudsman will cover Ofcom.

Stephen Timms: I can soothe the hon. Gentlemen's ruffled sensibilities. We are ahead of them. The Cabinet Office is updating schedule 2 of the Parliamentary Commissioner Act 1967 and will shortly make an order to amend it. Ofcom will be included in that order. We shall reach the precise position that the hon. Members for Sheffield, Hallam (Mr. Allan) and for Maldon and East Chelmsford have argued in favour of, albeit by a different route.

Michael Fabricant: Was the Cabinet Office taking such action before we tabled the amendment?

Stephen Timms: I can say that the matter is in hand. For the reasons set out by the hon. Member for Maldon and East Chelmsford, it would be unthinkable for Ofcom to be outside the scope of the ombudsman.

Brian White: Given that the review of the position of the ombudsman has been taking place for two years, can my hon. Friend assure me that it will be finished before the Bill is enacted?

Stephen Timms: I can certainly assure my hon. Friend that that will have happened before Ofcom is in operation by the end of the year. The answer to his question is yes.

John Whittingdale: I am disappointed by the Minister's response. Although I am encouraged by the fact that he accepts the principle of my argument, he said that the Cabinet Office will deal with the matter. As the hon. Member for Milton Keynes, Northeast rightly pointed out, it is taking a long time.

Brian White: I am talking not about a review of an individual component, but about a complete review of the ombudsman's functions, including removing the MP's filter and improving the way in which the ombudsman works in a collegiate form.

John Whittingdale: That increases my concern, because the hon. Gentleman is saying that the review will be huge and that it will examine a host of areas. Surely, everyone, including the Minister, accepts the simple proposition that we have advanced. I accept that it is the Government's intention that Ofcom should be brought under the terms of the Parliamentary Commissioner for Administration, but we have offered a simple and easy method of achieving that straight away. All the Government have to do is to say, ''Yes'' to our amendment, and that will be it. We have made the life of the Cabinet Office easier by doing its work for it. I am not persuaded to withdraw the amendment, given that the Government accept the merit of our case.

Stephen Timms: The amendment is also valuable for whiling away a few minutes of the Committee's time. I understand that the exercise will be completed within two months, which is well before the period to which members of the Committee have drawn attention.

John Whittingdale: If the Minister is giving me a guarantee that Ofcom will be brought within the remit of the Parliamentary Commission for Administration at least as fast as—if not faster than—the enactment of the Bill, I shall withdraw the amendment.

Stephen Timms: Yes.

John Whittingdale: I regard that as a triumph. On that basis, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Stephen Timms: I beg to move amendment No. 672, in
schedule 17, page 480, line 20, after '2003' insert 'and, in the case of a direction to a provider of a public electronic communications network, notwithstanding that it relates to him in a capacity other than as the provider of such a network.'.

Roger Gale: With this it will be convenient to take the following:
 Government amendments Nos. 673 and 674.

Stephen Timms: Paragraph 70 of schedule 17 deals with several minor and consequential amendments to update section 94 of the Telecommunications Act 1984, which currently gives the Secretary of State powers to serve directions on public telecommunications operators in the interests of national security or relations with a foreign Government. The updating of section 94 principally involves replacing the concept of public telecommunications operator, which has no direct equivalent in the new framework for the regulation of electronic communications. On reflection, we have reached the view that the amended provision under the Bill runs wider than is needed, in that those principally addressed are the providers of public electronic communications services. The existing power of direction is addressed principally to public telecommunications operators, a much smaller group.
 We have therefore concluded that the scope of amended section 94 can be reduced, so that people with whom it is concerned are no more than the providers of public electronic communications networks. It is, however, necessary to ensure that a direction, while it may be addressed only to such a person, can apply to him in any capacity. That is consistent with the provisions of subsection (8) of section 94. We are narrowing the scope of the provision on the basis of further reflection. I hope that the Committee will consider that that is helpful.

Andrew Robathan: I have no complaints about the amendments, but can the Minister tell us how many Government amendments have been accepted? On Second Reading, we were told that the Bill was just about perfect after being subject to scrutiny of the Joint Committee. I offer a wager that 100 amendments have been accepted. Can he tell how many have been?

Stephen Timms: Sadly, I am unable to tell the hon. Gentleman whether he will win the wager. I will make sure that he has such information by this afternoon's sitting.
 Amendment agreed to. 
 It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.